# Division of Labour

## Definition

The separation of work into specialized tasks that increases productivity and depends on opportunities for exchange.

## Source Chapter

Book I, Chapter 3

## Context

Smith explains that the power of exchanging gives occasion to the division of labour, but that this division is constrained by how much exchange the market can support.

## Economic Domain

Production

## Original Wording

Smith writes that the power of exchanging gives occasion to the division of labour.

## Modern Interpretation

Specialization works only when producers can exchange specialized output for the goods they need.

# Market Extent

## Definition

The geographical and economic reach of exchange that determines whether specialized producers can find enough demand for their surplus output.

## Source Chapter

Book I, Chapter 3

## Context

Smith states that the extent of the division of labour must always be limited by the extent of the market.

## Economic Domain

Exchange

## Original Wording

The extent of this division must always be limited by the extent of the market.

## Modern Interpretation

Market size sets the practical ceiling for specialization because small markets cannot absorb surplus production.